International Tax Co-operation (Economic Substance) Regulations, 2020 (SL 112 of 2020)

Summary

This is a short piece of subordinate legislation made by the Cayman Islands Cabinet under section 15 of the International Tax Co-operation (Economic Substance) Law (2020 Revision). Its sole substantive function is to prescribe, via a Schedule, the specific categories of information that the Tax Information Authority (the Authority administering economic substance requirements, i.e. DITC) may require from a 'relevant entity' under section 7(4)(k) of the Law when that entity makes its economic substance return or notification.

The Schedule lists eight categories of information the Authority can request:

• Details identifying the relevant entity's immediate parent, ultimate parent and ultimate beneficial owner and their tax residence.
• Information about expenditure on third parties conducting core income generating activities on the entity's behalf.
• Information confirming the entity monitors and controls such outsourced activities from within the Cayman Islands.
• Copies of financial statements or books of account.
• Details of employees conducting core income generating activities, including numbers and qualifications.
• Confirmation of compliance with section 4(3) of the Law and the number of board meetings held inside and outside the Islands.
• Confirmation of compliance with section 4(5) of the Law.

In practice, this Regulation does not itself create a new filing regime but fills in the substantive detail of what the Authority is entitled to ask for as part of the existing economic substance reporting framework. Any entity classified as a 'relevant entity' conducting a relevant activity under the Economic Substance Law is affected, since it may be required to supply these particulars when reporting to the Authority.

Key obligations

• Relevant entities must, when required by the Authority under section 7(4)(k) of the Law, provide the name, address and jurisdiction of tax residence of their immediate parent, ultimate parent and ultimate beneficial owner.
• Relevant entities must provide information on expenditure incurred on third parties conducting core income generating activities on their behalf, when requested.
• Relevant entities must provide information demonstrating that they monitor and control in the Islands the carrying out of core income generating activities performed by another person, when requested.
• Relevant entities must provide a copy of their financial statements or books of account for the relevant financial year, when requested.
• Relevant entities must provide information on employees conducting core income generating activities, including numbers and qualifications, when requested.
• Relevant entities must confirm compliance with section 4(3) of the Law and disclose the number of board meetings held inside and outside the Islands, when requested.
• Relevant entities must confirm compliance with section 4(5) of the Law, when requested.

Applies to

relevant entities conducting relevant activities under the International Tax Co-operation (Economic Substance) Law